Archive for February, 2013

By Bruce P. Miller

Wednesday, February 20th, 2013

Although Workers’ Compensation law in New Jersey typically involves a Statute of Limitations of two years, there are exceptions. When someone has sustained an injury in a work accident, the basic law requires that the case be filed within two years of the date of the accident. This is similar to a case involving injuries sustained, for example, in a motor vehicle accident. However, there are important differences. If an employee is injured in a work accident and receives treatment authorized and paid for by the employer or its insurance company, or receives disability benefits from the employer or its insurance carrier, the formal case (the filing of a Workers’ Compensation Claim Petition) only has to be filed within two years of the last payment of disability or the last treatment received from the medical provider who was paid for by the employer or its carrier. In other words, the case does not have to be filed within two years of the date of the accident; rather, it has only to be filed within two years from the last date of treatment or the last payment of disability. Therefore, if the treatment that was paid for by the employer or its carrier extended for a period of two or three years, or disability benefits were paid for a period of two or three years following the accident, the Claim Petition need only be filed within two years from the date of that last payment.

When the Workers’ Compensation case deals with what is called an occupational injury rather than an accident, namely, that the injury was sustained as a result of day in and day out stress rather than one specific accident, a different Statute of Limitations applies. This law says that the Workers’ Compensation case has to be filed within two years of the date that the injured worker knew, or should have known, that the injury was related to the job. For example, if the person suffered an injury to his/her lungs as a result of inhaling dirt or fumes on the job, that person may not realize or appreciate that the lung condition is due to work until such time as he/she is told so by a treating doctor or by an attorney to whom the employee is referred. In those instances, that employee is not deemed to have known nor should have known of the connection between the lung condition and work environment until told so and thus the case itself does not have to be filed until two years from the date that the opinion was given by a reliable source, such as a doctor or a attorney.

By Gary E. Adams

Thursday, February 7th, 2013

New Jersey Senators Nicholas P. Scutari and Jennifer Beck introduced legislation on January 8, 2013 that would statutorily provide a cause of action against insurers who act in bad faith. This bill, S-2460/A-3710, is being called the “Consumer Protection Act of 2012.” A similar version was proposed on September 19, 2011, S-3036, yet it was not cleared by the Senate Commerce Committee. The bill would incorporate into statutory law aspects of New Jersey’s current case law, which recognizes private causes of action in first-party and third-party claims for bad faith by insurance companies which result in harm to their insured.

The Consumer Protection Act provides that a claimant, regardless of any action taken by the Commissioner of Banking and Insurance, may file a civil action for violation of the statute known as New Jersey’s Unfair Claims Settlement Practice Act. N.J.S.A. 17:29(B)-4(9). The right to take action under the Statute would no longer be limited to state actors. A claimant can be an individual, corporation, association, partnership, or other legal entity that asserts a direct or assigned right to payment under the insurance policy. The claim can be first-party or third-party. The Statute outlines the acts that are considered bad faith including: misrepresenting pertinent facts or policy provisions, failing to acknowledge and act reasonably to communications with respect to claims, failing to implement reasonable investigation, and failing to make a good faith attempt to settle claims in which liability has been made reasonably clear. N.J.S.A. 17:29(B)-4(9)

Common law provides that an insurance company is obligated to act in good faith. Rova Farms Resort, Inc. v. Investors Insurance Co. of America, 65 N.J. 474 (1974), is the seminal case on what constitutes bad faith in third party actions. In the Rova Farms decision, and others which have followed, the Court held that an insurer has a duty of good faith and fair dealing towards its insured. A breach of this duty occurs from a failure of the insurer to act reasonably on behalf of its insured to protect the insured’s financial assets. The insurer has a duty to accept a reasonable settlement demand that will protect the assets of its insured. Factors which an insurer must consider include the anticipated range of a verdict should it be adverse; the strengths and weaknesses of all the evidence to be presented on either side so far as known; the history of the particular geographic area in cases of a similar nature; and a relative appearance, persuasiveness, and appeal of the claimant, the insured, and the witnesses at trial.

The proposed legislation would strip N.J.S.A. 17:29(B)-4(9) of a clause which required that prior to a suit being filed, the insurer must have committed or performed bad faith acts with such frequency as to indicate a general business practice. In other words, there need not be any pattern of bad faith exhibited by an insurance company before a suit may be filed.

Under the proposed bill, in a third-party claim, if a claimant is successful and proves bad faith, they would be entitled to the full amount of damages that is determined in the final judgment, without any concern for the policy limits. A claimant would also be entitled to prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses from the date the action was filed. In a first-party case, the claimant would be entitled to damages which are outside of the coverage provided by the policy – consequential damages.

In addition, punitive damages may be available to a successful claimant. Punitive damages are only available when the insurer’s acts or omissions demonstrate, by clear and convincing evidence, actual malice or wanton and willful disregard of any person who foreseeably might be harmed by the insurer’s acts or omissions.

This Bill, if enacted, would finally afford claimants a clear course of legal action against an insurance carrier that has failed to fairly and expeditiously address valid claims. Under current law, insurance carriers can unreasonably deny or delay claims without any real fear of legal or financial penalties for doing so.